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A company is in need of extra funds, so it considers issuing a bond. In the bond, the company promises to pay back as
A company is in need of extra funds, so it considers issuing a bond. In the bond, the company promises to pay back as follows: Year 1 2 3 Cash flow ($ million) 15 15 15 4 115 The interest rate is 5% per year. a) What is the present value (value today) of the cash flow stream of the bond? b) How much fund is the company able to raise today by issuing the bond?
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To calculate the present value of the bond we can use the formula for the present value o...
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Management and Cost Accounting
Authors: Colin Drury
8th edition
978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887
